A battle won, but questions still unanswered

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John Howard's morning power-walk around the streets of Kirribilli took him, at times, over footpaths chalked with political protest that he symbolically walked right over.Photo: Penny Bradfield

John Howard's great gamble has paid off.

The choice he faced 16 months ago was whether to bow out a three-time winner and hand over the prime ministership to Peter Costello or to stay and try for a fourth term.

Last night, his decision to stay and fight was vindicated. He will be seen as a hero in the Liberal Party and joins Robert Menzies and Bob Hawke as the only men to win four elections.

Barring surprises, he will get an early Christmas present on December 22 when he passes Mr Hawke's record to become the second-longest-serving PM, behind his hero, Menzies.

But the election win does not end questions about Mr Howard's future. During the campaign, he refused to give an explicit commitment to serve the full term if re-elected, saying only that he would stay on as long as his party wanted him to remain leader.

It won't take long for the focus to switch back to Mr Howard's future. Will he stay on as Prime Minister for the full term and contest the next election? Political observers think that is unlikely. So how long will he stay? March 2006 will mark 10 years as PM and could be as good a time as any to stand down and give Mr Costello 12 to 18 months as leader to show his style before a 2007 election.

The Melbourne 2006 Commonwealth Games in March could be an excellent platform for Mr Costello to start his prime ministership. But Mr Howard might want to wait until after the May budget that year, perhaps retiring on his 67th birthday in July.

The most immediate task for Mr Howard will be to choose his new ministry and prevent the party from becoming complacent or arrogant.

Mr Howard told The Sunday Age he hoped to recall Parliament in the second week of November, which is as fast as constitutional requirements allow. "People will get back to work immediately. There will be no long period of recreation," he said.

Mr Howard is expected to substantially shake up his team. Mr Costello will remain Treasurer and Alexander Downer wants to stay Foreign Minister, but all other ministers may be changing portfolios. Among those who face an uncertain week are Victorians Kay Patterson (Family and Community Services) and Rod Kemp (Arts and Sport), as well as Danna Vale (Veterans Affairs), Gary Hardgrave (Citizenship and Multicultural Affairs) and Ian Macdonald (Fisheries and Forestry).

Among those who will be knocking on the door for promotion to the ministry are Andrew Robb and Malcolm Turnbull, Victorians Sharman Stone and Bruce Billson, George Brandis from Queensland, Christopher Pyne from South Australia and former marathon runner Pat Farmer from NSW.

Mr Howard said the "principal goal" of his re-elected team would be to deliver on his central election theme of maintaining the strength and momentum of the economy. Mr Howard's claim during the campaign that interest rates would always be lower under his government will be put to an early test on Melbourne Cup Day, when the Reserve Bank board meets to consider a rate change.

One of the first reforms the Government will tackle is the chronic skills shortage that Mr Howard says will hurt the nation's productivity if it is not fixed. Mr Howard plans to set up 24 technical colleges for year 11 and 12 students, give apprentices $800 tool kits and make them eligible for the youth allowance.

The Government will also move quickly to push through its $31 billion schools funding package and require schools to issue plain-English report cards and give students a grade from A to E.

Self-funded retirees will get a $100 "utilities bonus" in time for Christmas, but aged pensioners will have to wait until March for their $50.

Other priorities Mr Howard has marked out for his fourth-term agenda are to support "entrepreneurial culture" among small businesses through a 25 per cent tax discount and new laws to protect independent contractors from unions; to tackle water shortages, the "great conservation challenge"; and to increase the private health insurance rebate for those over 65.

One area to watch will be Mr Howard's increasingly tense relationship with the eight state and territory Labor leaders. He intends to shut them out of his plan to set up tech schools and will bypass them in the allocation of $300 million in extra federal funding for government school upgrades. The states are also fuming at his decision to take their competition policy payments and use the money to fund a water conservation strategy, while Health Minister Tony Abbott frequently flirts with the idea of taking the hospital system off the states.

On the international front, Mr Howard is keen to organise a meeting with Indonesia's new president, Susilo Bambang Yudhoyono. They will discuss how to tackle regional terrorism, and Mr Howard's plan to set up counter-terrorism flying squads.

As the year draws to a close, Mr Costello will begin setting the framework for the May budget - his 10th - and making sure he can pay for the $14 billion in campaign promises.

No doubt he will wonder (not for the first time) if this is his last budget.